The Christmas season would be a reason to be merry, would it not be for Hugo Chavez. More details about his expropriation threats emerge. Turns out, Chavez did not just threaten to kick out Toyota for being lackadaisical in the production of “rustic” vehicles.

“President Hugo Chavez told foreign automakers Wednesday to share their technology with local businesses or they will be told to leave the country,” writes the Boston Globe. Chavez gave the ultimatum in wholesale fashion to Ford, General Motors, Toyota and Fiat. Implied, the ultimatum is also meant for Fiat-controlled Chrysler, for Mitsubishi, Mack and Fiat-owned Iveco. All of the above have production facilities in Venezuela. All are at risk of instant deportation.
Their options are either to “share their technology with local businesses” (a half-expropriation) or get out (a full expropriation.) Chavez usually doesn’t do nationalizations in piecemeal fashion. He tends to nationalize whole industry sectors. The metals, cement, oil, coffee and electricity sectors are all being owned by the people of Venezuela, or Hugo Chavez, depending how one looks at it.

The auto sector appears to be next in line. Chavez is no fool, and he knows that building cars is not as simple as pumping crude, or baking limestone to make cement. Without foreign technologic know-how, Venezuelan’s roads will soon resemble Cuba’s highways. Hence the offer “share, or go.” If the foreigners go, other foreigners could be invited in: Automakers from Russia, Belorussia, or especially China.

Today’s Nikkei [sub] sees even more sinister dealings afoot: Oil and China. Says the Nikkei: “The takeover threat and possibility of turning control over to the Chinese comes on the heels of two days of bilateral talks with China that ended Tuesday. The Chavez administration said in a statement after the talks that it now considers China its ‘main strategic alliance.’”

Venezuela currently sells 1 million barrels a day of Venezuelan crude to the U.S. Chavez wants to reduce this co-dependency, and focus on China instead. Venezuela currently ships 400,000 barrels a day to China. Chavez wants to raise that to a million per day, damn the distance from Puerto La Cruz to Qingdao.

Chinese cars could be a nice icing on that trade cake. According to the Nikkei, Great Wall Motors begun selling cars in Venezuela in 2006. Chery had plans to open an assembly plant in Venezuela, but nothing came of it – yet.

US and Japanese makers dominate the market in Venezuela. GM leads the market with 45,523 vehicles sold so far in 2009, Ford is second and Toyota is third. Sales are down 49 percent this year, but not because of a lack of buyers. Demand far outstrips the low supply of cars in Venezuela. A gallon of gasoline costs about $0.07 in Venezuela. The land of the “21st Century Socialism” would be a driver’s paradise, if only the roads would be paved and if only cars would be there to be bought.

Indigenous production is hampered by strict currency controls that prevent automakers from getting the dollars to import auto parts they need to meet production goals. Auto makers also have to contend with a “high level of absenteeism, disobedience, aggression and lawlessness of some of the workers,” says the Nikkei. Mitsubishi had to shut down its plant for 30 days in August, because the workers didn’t show up. In May, a Toyota union leader was shot dead. He had led a month-long strike last year that paralyzed the Toyota plant in the eastern city of Cumana. In September, murder charges were brought against a man, but the motive remains a mystery.

Says the Nikkei: “It appears many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with it.”

Should it really come to the Chinese taking over Venezuela’s auto plants, then the workers may be in for a rude surprise. Chinese factory managers are not necessarily known for their subtle style when it comes to labor relations. GM, Ford, and Toyota should send their union leaders on an all expense paid study tour to the suburbs of Shanghai, or to frigid Changchun, and they’ll quickly change their minds.

The matters are being complicated by the US and Japan being major trading partners of China, and by GM and Toyota having major joint ventures in China and buying lots of parts from Chinese manufacturers. China will gladly buy Venezuela’s oil and build them some ports to go with it. But they won’t put their booming auto business at risk for some 100,000 “rustic” cars built in Venezuela.

Hmmm…I wonder if Chavez has a “commerce clause” in his constitution, or if he just makes it up as he goes along? Is there a difference? I’m sure his DC pal’s taking notes, making up his own list and checking it twice, this Christmas.

I’m sorry, but I live in NYC and am surrounded by what I’m sure you would refer to as godless liberals. Who exactly is it that you think admires this tin-pot douchebag? Venezuela is an unimportant country run by a shallow man who is obviously no student of history. That’s all there is to it.

The “DC pal” comment is ridiculous and, I hope, a joke. Not smart, not relevant, and not supported by any sort of argument.

I think the B&B of the B&B might be spending time with family this morning.
Chavez may need to worry about a similar fate of the Toyota Union boss.
These multi-national corporations have special ways of dealing with problems.

Chevez isn’t the problem…its China.
All of this “internationa/world business” plan is going to be the real end fight.
When you deal with communist/dictatorships, no contract is worth its paper.
Whatever you lend them is really theirs to keep.
You build an auto plant there, its really their plant.
You sleep with this spider, you will awaken wrapped in its web and slowing being eaten.

I long ago stopped bying my gas from 7 Eleven/ Citcos because of the Chevez contection.
I simply could not by my drug of choice from the mob.
I have heard this connection is severed, but am not sure.

Now, as far as his threat, let him sign his deal with China for oil.
Oil is like water and will flow into any open void/space. If his oil stops coming here and goes to China, somebody else’s oil formerly going to China will flow here.
That’s the way it is.
Oil is available…
Oil is going to be found, even if the price needs to go up to make more refineries or pull out more from the earth.

I had a friend some years back who owned a 120′ yacht with a 10,000 gallon diesel tank. He would go to Venezuela and buy enough fuel to last a year, cheap! I seem to remember he told me diesel was $0.50 a gallon in those days, so I guess Chavez must have bumped up the subsidy. (An efficient yacht of that size, and I believe his was pretty efficient, gets about 1mpg).
Why would China have anything to do with Chavez’ expropriated automakers? Surely they wouldn’t trust Chavez not to do the same to them if they ever made a profit.
D

Hmmm, is that your idea of Democracy in action? The days when the US can go willy nilly around the world bombing people into submission are pretty much over, if in fact those days ever really existed at all.

John,
GM & Chrysler are owned by the US Government. Nationalizing their plants in Venezuela would effectively be an adverse action against US government interests/property. Since Chavez feels like international law does not apply to his government, and he thinks can do whatever pleases him in lieu of consequences, the US government must protect it’s interests by any means necessary. Unfortunately since Chavez does not understand diplomacy or international law there can only be one way to resolve this quagmire that we find ourselves in. Too bad the current US government will turn the other cheek and do absolutely nothing about this.

With GM being effectively the property of the US government these days, wouldn’t a Venezuelan nationalization be tantamount to an act of war? It is one thing stealing the property of a private citizen or citizens (as in Ford or Toyota) but this would seem to me to be something else.
Putting aside the issue of whether the US could or should do anything about it, it seems to me that the grabbing of US government assets by a foreign country would be an act of aggression that would (at least legally) justify military action in response.
Chavez is anything but stupid, so I figure that he has calculated that the US will not do anything about it if he does make a grab.

Think of it this way: what signal would it send that we will stand by and watch genocide happen in Darfur without a single American bomb being dropped, but go to war over over GM and Chrysler getting jacked?

Just because you have a reason to fight doesn’t mean that fighting is the smart – or feasible – thing to do. Going to war over this would be an EPIC mistake.

Tokyo, Washington, and Rome should advise their respective companies to pull out, fast. Seizing oil derricks is one thing, but seizing the knowledge of how to build automobiles? Knowledge is power Screw Chavez, let’s get out.

At least 60% of the people of Venezuela are NOT supporters of Chavez according to recent economic reporters. Only ultra conservative and ultra patriotic people support him and the poor who hope to get something for nothing.

Liberals in the U.S. and Venezuela definitely do NOT support Chavez and the way he is manipulating the Venezuelan government, their elections, and their economy.

Probably the business people are hoping the next election isn’t rigged or even the poor will get tired of this jerk.

Remember that gun boat diplomacy is very expensive and we are already in two wars. If China (and the rest of the world) thinks we are trying to steal another source of oil the U.S. could have a lot of problems that would be a lot more expensive than losing a few auto plants.

Besides if we lose the auto plants this year there is an excellent chance we will get them back when Chavez is finally thrown out.

Chavez is having fun trying to play businesses and governments against each other but the U.S., China, Japan, Europe, and the rest of South America have too much to lose to lose their heads over his shenanigans.

I absolutely despise the heavy-handed politics we as the United States have used in the past in Latin America. Totally uncalled for in almost every instance and it didn’t really get us far anyway, just destroyed relations with the region as a whole.
To be frank, if we’re going to have any hope of staying on top vs China, EU, and to a lesser extent India, we’re going to need more numbers and more friends. We should start treating our New World brethren as such.

Uh, no, it wasn’t. If you read up earlier in the thread I show distaste for Chavez “aggressive socialism”, for lack of a better term, so I’m not suggesting we buddy up with him. But the rest? Yeah, I’m serious. Does that make you feel better?

Hugo will be driving a Geely Volvo very soon.
The US is being phased out of the global marketplace one deal at a time, and we are too poor to do anything about it, except help by say selling Volvo to the Chinese.

Nationalization would be great for Chavez. And if he gets new technology, the Chinese will surely scratch his back to get the latest and greatest from Japan. Why buy old gen Saab tooling when you can get new stuff?

And the insults about people’s comments need to stop, because most of them are even more asinine than the original comments (and add even less to the discussion).

I have trouble imaging that there is much in the way of new technology, manufacturing expertise, or IP at any of these plants. Most likely they are just stamping out old designs that have been long-since obsoleted elsewhere; probably vehicles which are too “rustic” even for the Chinese market . . . . but I have no specific knowledge here, just an educated guess.

Bertel, they got all the facts right. I posted some link to local news the day before yesterday and an extract from them (in spanish)
According to the Nikkei, Great Wall Motors begun selling cars in Venezuela in 2006. Chery had plans to open an assembly plant in Venezuela, but nothing came of it – yet.
Yes, both of them started selling cars here about the same time. Both of them want to set up assembly sites here. I know some of the people from Great Wall. Venezuelan ones. Also in the process are Dongfeng (Civetchi, I think they already opened), JAC trucks and Zotye with the Nomada, which is supposedly going to be produced at the old Honda site.
Says the Nikkei: “It appears many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with it.”
Their analysis is right, but their hypothesis are wrong. Yes, they have been told they are going to rule the factory (not specifically the Toyota/Mitsu workers, just workers in general). No there’s no extra job security. In fact, their jobs are safer (salary and benefits wise) with the private than with the government.
What is going to happen goes more or less like this: the workers will slow production and make many many problems for the manufacturer to produce. Then, they will request the unobtainable during work contract discussion. The government will serve as mediator, no agreement will be reached. Workers will continue the conflict, putting more pressure. The government nationalizes the company. Then…
The workers will get the PWNAGE of their lives (see SIDOR case). The benefits they were requesting… no no. The union… better if its dissolved, if not, well, they’re not willing to netotiate with them.
As I said, it’s better for them to work together with their patrons.
Should it really come to the Chinese taking over Venezuela’s auto plants, then the workers may be in for a rude surprise. Chinese factory managers are not necessarily known for their subtle style when it comes to labor relations
Don’t know them, but the government is moving toward having 51-49 joint ventures, guess who get the 51… Managers would be locals, but it won’t be nice for them. The chinese would be for technical help, but very involved during the start and ramp up fases. This is from my experience with the iranians.
But they won’t put their booming auto business at risk for some 100,000 “rustic” cars built in Venezuela
No shit, LULZ. There’s no market here for that. Total market this year is going to be around 160K units
“high level of absenteeism, disobedience, aggression and lawlessness of some of the workers,”

15% absenteeism, sometimes coordinated.
says the Nikkei. Mitsubishi had to shut down its plant for 30 days in August, because the workers didn’t show up. In May, a Toyota union leader was shot dead. He had led a month-long strike last year that paralyzed the Toyota plant in the eastern city of Cumana. In September, murder charges were brought against a man, but the motive remains a mystery.
Half information. They are not mentioning the 4 months Mitsubishi was stopped from about December 2008 to April 2009. Also Toyota had a big strike from January to March-April in solidarity with the Mitsubishi and Vivex (glass supplier) workers.
This is a stupid threat no matter how you slice it. PDVSA and the government went to Japan to ask for money, even selling oil in advance. Also offered some off shore platform projects. And then, slap, I’ll fuck your manufacturers.
Stupid. But this is something we sadly got accustomed here.

Bravo Hugo Chavez a man of THE PEOPLE and not a puppet for the RICH. Unlike Bush and Obama who take from the poor (taxpayers) and gives to the RICH (Banks) to the tune of TRILLIONS. I doubt you brainwashed MSM puppets will ever understand REALITY. The only reality you know is that told from the greatest propaganda box (tv). Enjoy your economic prison US taxpayers. Remember peace = war which explains why Obama got the nobel peace prize. I could explain reality but i doubt you puppets will ever wake up from your sleep. One could punish you in your ignroant face with facts and truth and you still would sleep.

And speaking of “mindless,” Ronnie, how intellectually bankrupt is the argument that because this guy supports Chavez, all of us who are left of center must therefore feel the same way?

By the same logic: because some “righties” feel that bombing abortion clinics and gay bars is God’s will, and wish for President Obama to die, all conservatives must agree. Is there a flaw in that reasoning, by chance?

If you want to find out how THIS “leftie” feels about Hugo Chavez, ask. But do me the honor of asking before you assume. I take offense to your argument.

A couple of years ago Evo Morález, the president of Bolivia, did the same thing to Brazilian state company Petrobras’ oil and gas refining facilities (which were mainly developed in th 90s as a political choice of the Brazilian government for getting its paws into Bolivia and becoming more influential due to its presence. As explained below, Brazil doesn’t need Bolivia’s gas). As one commentator said above, some analysts argued that being said facilities the property of a state company (akin to GM’s situation now?) Brazil was entitled to strike at Bolivia militarily. Other analysts disagreed.

Brazil however chose to do nothing. As some of you know, our current leaders like to think of themselves as some kind of avantgarde socialist government that’s shining a light to the world. So they basically said,let them have it those poor souls, they’re so poor. Brazil nowadays like to think of itself as a somewhat rich country and ignore the fact that more than half of its population is under the poverty line…but I digress.

Behind the scenes though, other more pro-active actions were taken. The gas rich Santos (in the coastal waters of São Paulo state) basin is being developed and as soon as 2012 or 2013 will begin production and will leave Bolivia in a pickle as it will be able to produce more than enough for our own needs. So Bolivia will be left with all the gas in the world w/ no one to sell it to. Natural gas is best shipped by pipes and that leaves it pretty much at the hand of its neighbors. If all of Argentina converted to Bolivian gas that would still be tantamount to 25-35% of what Brazil buys today. So good luck Bolivia, and soon, bye-bye.

All of this is to say, do the same to Chavez. 40k cars ain’t much to get riled about. And the plants are probably not very modern due to all the limitations to imports and Venezuela’s precarious industrial base. Did a quick search on-line and also found that all of Renault’s and Fiat’s production is imported. Much like Brazil doesn’t need Bolivia, the world doesn’t need Chavez. Ignore him. He’ll eventually go away.

If all of Argentina converted to Bolivian gas that would still be tantamount to 25-35% of what Brazil buys today. So good luck Bolivia, and soon, bye-bye.
+1. While I’m hardly a fan of state controlled oil companies, Brasil’s Petrobras is very well run – probably second only to Norway’s oil company. Also, if Argentina does want gas, who do think they’d rather deal with? Petrobras or Morales?
The Morales / Chavez mindset can’t get around the fact that, unless you have a monopoly on a commodity, confiscating assets and abrogating contracts will have long term negative consequences.

FromBrasil
You seem to assume that the Bolivians want to sell their gas. Historically Bolivia has been blessed with many natural resources. It is also one of the poorest South American countries. Some say that it is so poor because of those natural resources and i don’t know if they are wrong.

What’s the use of all these natural resources if they’re not beeing used? It’s like having a sea of petrol under your farm, but not having the resources to pump it out and sell to whoever wants it. So your technically worth millions, but you have no money (cash). Bolivia has a very small industrial base. The population is small. They can use only a tiny part of their resources. So..they have to sell. And the only countries around them that can use that “excess” capacity is Brazil, Argentina and maybe Chile (due to limits of and cost of pipelines).

Ideally, you’d sell it and separate a part to build up your own infrastructure and companies. Historically, they have been unable to do so. For many reasons.

So, when Brazil stops buying, they’ll be sitting on an ocean of gas that they can’t use and is very difficult to be sold elsewhere. That’s what I call a conundrum.

But I wager that once Brazilian production starts, what’ll happen is that Brazil will do alot of arm-twisting and lower the price. And still buy some of its necessity from Bolivia in order to, like I said before, maintain a presence and influence in that country.

“I’m sure his DC pal’s taking notes, making up his own list and checking it twice”

Truer words have never been spoken. Facism’s an ugly word that some people in the US seem to be reluctant in admitting. 71% of the economy will be under government control when the “health care” bill is signed.
Stock up on ammo.

“A fascinating analysis by Bertel, but the quality of TTAC “B&B” commentary is going down the tubes”
Why? Because some here have the nerve to point out the truth, that there is some thinking in common, like the role of government for instance, between Hugo Chavez and the current occupant of 1600 Pennsylvania Avenue. This kind of comment make the American Left very uncomfortable. Too bad.

Since American conservatives and the mullahs in Iran both believe that religion should play a central part in a nation’s life, Iran’s theocracy should make conservatives very uncomfortable.

Your “argument” linking Obama and Chavez is pure hyperbole. Or do you not see a massive difference between bailing out private enterprises with the intent of keeping them private, and simply nationalizing domestic firms (or foreign companies in peacetime, for that matter), and seizing their physical and intellectual assets? That would be like Obama seizing Japanese-owned car plants in our country to steal their technology. Even suggesting he’d do that is completely absurd.

This kind of comment make the American Left very uncomfortable. Too bad.

There’s an American Left? Since when? Last time I checked, the political spectrum in the US ran the gamut from Right and Ultra-Right. Kucinich is about as left-wing as a mainstream leftist politician gets, and he’d be best described as a centrist just about anywhere else in the world.

Look, I am a leftist. I’ll go to the wall to defend actual, real, leftist policies. Throwing billions of dollars at bankers and captains of industry without actually getting any control out of it is not leftist. Forcing people to buy health insurance without providing a decent public option is not leftist**.

I don’t think many Americans, and especially American conservatives, understand what left-wing economic policies actually are, other than “stuff we don’t like”. They certainly don’t understand the difference (and there is a big one) between leftists like Stalin and leftists like Ghandi.

Chavez, by the way, is actually a leftist, mostly because he shows no hesitation to nationalize industry. He’s fairly authoritarian, too, but he’s not even on the same scale of authoritarianism that any number of leftist, centrist and right-wing countries (e.g., he has been democratically elected in internationally-verified-as-fair elections), and the humanitarian abuses aren’t noticably worse than any other “free” nation (eg, they have no death penalty). Obama, despite the panicked cries of demagogues, is not. Not even close.

Chavez goal in all of this is to establish a national, or at least more Latin-centric, automobile industry, rather than see Venezuela become a client state. He’s been able to play the Bolivar-esque card to his advantage, which is a fair ploy: he’s not violating international law, and he’s getting elected. The only difference between what he’s doing and what happens to anyone doing business in the R and C members of BRIC is that Chavez is more forthright, less insiduous and far less oligarchic about it. I suspect it’s the outright brashness that offends the business world at large; they like the delude themselves that they’ll come out ahead in China or Russia, but really dislike the idea of a nation-state getting uppity from the get-go and taking control, especially if the idea spreads.

** the health care debate in the US is interesting. I, and any other proponent of public healthcare, knew that what would come of the US policy debate wouldn’t be a functional, equitable system as you’d find in just about every other western nation, but some kind of hold-your-nose compromise that might even manage to be worse than the current system

I don’t think many Americans, and especially American conservatives, understand what left-wing economic policies actually are, other than “stuff we don’t like”. They certainly don’t understand the difference (and there is a big one) between leftists like Stalin and leftists like Ghandi.

I disagree. They understand perfectly well what the difference is. The problem is that their political argument depends on linking way-out leftists like Chavez with leftists like Obama. Of course, the difference is that American liberals believe that the government should lead the economy, Chavez believes government IS the economy.

It’s argument by hyperbole.

By the same logic: since both American conservatives and the mullahs in Iran both believe that religion should play a larger part in national life, there’s a “link” between them. Any educated person would know that any comparison is pure nonsense.

One only has to look at the Senate Healthcare bill — a fully compromised effort containing many (but not all) pro-business provisions that Republicans favor. And NOT ONE Republican vote – all of the “compromise” happened within the 60 Democrats who pushed the bill forward.
This implies that the Dems cover nearly the full political spectrum, and that the Republicans are waaaay right – but I guess that’s their role these days, as given their marching orders by tea partiers, Glenn Beck and Rush Limbaugh.